At your first meeting with the Finance Director of a new client, they tell you that “business is so good we can barely keep up with orders! Luckily we took on a short-term loan at the beginning of the year to upgrade our factory”. Which of the following results of analytical procedures is least consistent with the Finance Director’s statement?
a. An increase in the net profit ratio from 0.09 to 0.10.
b. An increase in the gross profit ratio from 0.34 to 0.41
c. An increase in the quick ratio from 0.73 to 0.80
d. An increase in the inventory turnover ratio from 4.7 to 5.88 times a year.
